Wal-Mart Stores has completed its $3.3 billion acquisition of Jet.com following the expiration of the waiting period under federal regulations, with the Jet.com CEO reporting directly to Wal-Mart CEO Doug McMillon.
McMillon made the announcement Monday (Sept. 19) via an Instagram post and more details were provided on the terms of Jet CEO and founder Marc Lore in a late Monday filing with the federal Securities and Exchange Commission.
McMillon noted in his blog post that the deal builds on Wal-Mart’s strong e-commerce foundation and is intended to help accelerate growth and deliver a seamless shopping experience for customers. Walmart.com and Jet.com will operate as separate brands, while leveraging technology and talent across both entities.
“We’re thrilled to welcome the Jet.com team to the Walmart family and excited to expand the ways we serve our current customers and reach new customers online,” McMillon said. “Jet brings a unique approach and technology that puts customers in control of their experience, helping them find additional ways to save.”
Lore now joins Walmart’s leadership team, serving as executive vice president at Walmart and president and CEO of Walmart eCommerce in the U.S. He will lead Walmart.com and Jet.com, reporting to McMillon.
“I can’t wait to jump in and get started,” Lore said. “I’ll be spending a lot of time with the team in the coming weeks and months focused on scaling Walmart.com and Jet.com, building on our solid foundations. Together we will be stronger and move even faster to reimagine the future of shopping.”
Lore will receive slightly more than 3.554 million shares of restricted Wal-Mart shares as a portion of the $300 million in equity payments noted in the deal. Wal-Mart signed Lore to a 5-year employment contract, during which time the restricted stock will vest. Lore’s salary was not disclosed in the filing but the stock payment is tied to the fact that Lore must remain employed all five years. The stock will slowly vest over the next five-year period. If Lore is terminated or leaves on his own before then the shares will be voided.
Also in the filing, Wal-Mart expects the Jet.com acquisition will dilute earnings by 5 cents per share this fiscal year as a result of operating losses and one-time transaction costs, assuming the transaction closes near the beginning of Wal-Mart’s fiscal fourth quarter. The retailer said if the deal closes earlier there could be some marginal dilution above its previous earnings estimates for fiscal 2017.
Retail experts have said retaining Lore and his management team is a major positive for Wal-Mart but keeping him engaged for the full five years could be a challenge given that Lore is an entrepreneur and innovator that has often gone his own way. Some have said working for a retailer with a large bureaucracy may be tough for Lore who is seen more as a maverick than a company executive who will now working largely at the pleasure of the Walton family and the board.